Between the lines: Ways to grasp nettle of super

Alliance leader Jim Anderton is right to point out that pre-funding New Zealand Superannuation takes real money.

It would come out of the Crown's actual cashflow, not the notional, accrual-accounted abstraction called the operating balance, which has become the headline measure of fiscal rectitude.

The problem is that the cash balance now buried in the Budget's fine print as the sum "available to repay debt" if it is in the black, or "requiring to be financed" if it is not, is a very volatile number and frequently in the red.

This year, for example, the operating balance is forecast to be a surplus of $1 billion, but the cash balance is minus $850 million.

Critics of Finance Minister Michael Cullen's pre-funding scheme question whether it makes sense for the Crown to borrow money and try to save simultaneously.

Mr Anderton appears to have some sympathy for these critics' views.

But he also seems to recognise it would be a bad idea to insist that borrowing is forbidden and that the cash balance must always be kept in the black.

That is because throttling back the flow into the superannuation fund is not the only way to achieve a cash surplus.

The Finance Minister could pull other tricks: for example, underinvesting in capital expenditure on roads, school buildings and the like, or raiding the balance sheets of the remaining state-owned enterprises, or trimming the operating budgets of Government departments.

All of those would be perverse outcomes from Mr Anderton's point of view, hence perhaps his comment on Tuesday that if the Government needed to borrow for the fund it should be up front about it.

Individuals saving for their retirement tend to adopt a regular or a lump-sum approach.

They can opt to save a fixed portion of their income and budget to live within what remains, accepting that may sometimes mean making use of a credit card or overdraft to smooth cashflow.

Alternatively, they may say: "Damned if I will pay the banks interest. I'll put all my pay in a cheque account and when a decent credit balance builds up, buy some shares or whatever."

Human nature being what it is, this second approach is likely to result in a smaller nest egg.

The Government's scheme looks as though it will be some sort of compromise between the two approaches.

The bottom line is that any dollar which goes into the fund is a dollar that cannot be spent on something else or doled out in tax cuts.

That is the entire point of the scheme: to shift the split between what we spend as a nation and what we save in the direction of more saving.

With a current account deficit of 8 per cent of GDP, something needs to be done.

If not this scheme, then what? If not now, when?